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South Sudan’s new laws offer a blueprint for a transparent oil sector

NOV. 29/2012, SSN; Amid reports of endemic corruption, escalating security concerns, and delays restarting crude oil production, South Sudan’s new oil laws offer grounds to be optimistic about the prospects for development and stability, said Global Witness in a report released today.

The report, ‘Blueprint for Prosperity: How South Sudan’s new laws hold the key to a transparent and accountable oil sector,’ outlines the major opportunities and challenges the government faces in ensuring that management of the country’s oil wealth is responsible and open to public scrutiny.

“South Sudan’s new oil legislation contains strong public reporting, revenue management, and contract allocation requirements,” said Global Witness campaigner Dana Wilkins. “But laws are only as good as their implementation. The real test will be in whether or not the government follows through with these commitments.”

In July 2011, South Sudan became both the newest and the most oil dependent country in the world. With the oil sector bringing in more than 98% of the government’s revenues, South Sudan halted all production following a dispute with Sudan over confiscated oil shipments. The two countries have now agreed a deal for the export of South Sudan’s oil via Sudan’s pipeline infrastructure and operations are expected to restart shortly.

Since independence, there have been concerning reports of new oil sector deals being negotiated and awarded apparently outside of transparent bidding processes. No oil production data has been published, and it is not yet clear if exploration and production sharing contracts will be made public.

Building a transparent and accountable oil sector in South Sudan will require serious political engagement from the government, major capacity building, and consistent implementation of the blueprint set out in the new legislation. The report released today seeks to support such efforts by providing an analysis of the new requirements and making recommendations to address major risks and challenges. Key recommendations include the following:

The government should pass the draft Petroleum Revenue Management Bill without delay and ensure that strong provisions for the collection, management, auditing, and public reporting remain intact. [1]

The Ministry of Petroleum and Mining and the Ministry of Finance and Economic Planning should immediately start implementing the requirements for transparent contract allocation, and for the publication of production data, contracts, and quarterly and annual oil revenue management reports.

The government and international donors must ensure that South Sudanese civil society groups, and oversight bodies like the Audit Chamber and parliament, have the resources, access, and technical expertise necessary to carry out effective checks on the oil sector.

“South Sudan’s new petroleum laws are a major achievement which, if implemented effectively, could ensure that South Sudanese citizens are able to see and trust in how their oil is being managed,” said Wilkins. “Accountable management of the oil sector will be critical for the long-term development and stability of the nation.”